The Nexus Between Taxation and Gender-Based Informality: Evidence from Nigerian Enterprise Survey Data

Using the Nigerian enterprise survey data, this paper examines whether there is a gender dimension in the capacity of informal firms to contribute to tax revenues, a more specific question asked is whether tax rates and female gender ownership effects informality. Gender categorization of the firm’s ownership shows an overwhelming dominance of men holding over women, with a favorable ratio of 6:1 of the total sample. The results of the investigation on firms owned by females revealed that they are more likely to remain in the informal sector. By using the cross-sectional logit regression approach, we found no statistical significance between tax rates and a firm’s propensity to join the informal sector. It explains a typical scenario where the tax rates mechanism has failed to transmit effectively. Finally, we attained a divergent policy indication that suggests tax compliance enforcement and incentivizing female firms’ owners, among other measures.